9 to 5 Mac reports that it has heard from a source that Apple has been providing developers at high-level iOS gaming companies with new prototype iPhone models based on the A5 system-on-chip found in the iPad 2. The developers are said to have been given access to the devices, which look exactly like the iPhone 4 from the outside, to assist them in preparing for advanced graphics and computational performance available with the new chip.
They already have select developers working on versions of their iPhone applications that take full advantage of the next-generation iPhone's speedier and much more powerful hardware. These developers, seemingly from high-level gaming outfits, have been given what is essentially an iPhone 4 but with an A5 processor instead of an A4. The device itself is virtually identical to the iPhone 4, and there is no way anyone can tell it's not an iPhone 4 based on the phone's exterior.
The source is reportedly calling the prototype iPhone an "iPhone 4S" in a nod to the iPhone 3G-to-iPhone 3GS transitioned, but that appears to be an unofficial name. The souped-up iPhone 4 is also said to reside in a company safe when not in active use, an understandable move given Apple's penchant for secrecy.
The report notes that this A5-based iPhone isn't necessarily the next-generation iPhone rumored to be released in September, but may simply be a sort of mid-stage custom upgrade to give prominent developer partners access to hardware performing at nearly the same level as we will see with the fifth-generation iPhone. Apple is of course expected to pack in other new features such as an upgraded camera and presumably a world-mode wireless chip for the next iPhone, but those features are apparently not included on these development units.